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Blue Cross Blue Shield of Michigan is facing heat from the U.S. Justice Department of the Michigan Attorney General for alleged abuses involving attempts to artificially inflate the cost of health care in Michigan by drowning out competition. A federal district judge in Detroit denied Blue Cross Blue Shield’s attempt to have the case thrown out, and know the health insurance giant is appealing that ruling to the 6th Circuit Court of Appeals.

The lawsuit by the feds and the state of Michigan claims that BCBS inked contracts with over half of Michigan’s acute care hospitals, and that these strong-armed contracts prevented the hospitals them from charging competing insurance companies lower prices.

In some cases BCBS offered to elevate their reimbursement to hospitals if they charged competing insurance carriers higher rates.

In any event, the reality is that these contracts kept up the price of services. When it comes to co-pays and deductibles, it also means those costs would be higher for Michigan consumers, who have been disproportionately affected by this sagging economy.

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